Further to this, the Devil’s Kitchen highlights a bold welfare proposal. 

Every newborn child should have a ‘personal welfare’ fund opened, into which the government should pay, say, £5,000 each year until the child reaches 18. The fund should be private, like a pension fund, and thus invested, not a state operated fund financed from present tax receipts. The fund would accumulate £90k in static terms and should provide well over £100k after investment returns on maturity… This fund should be the only handout from the state, ever, to citizens. No more child benefit, no more unemployment benefit, housing benefit, tax credits, etc. The fund can be used [by] the individual as they see fit…

The advantages of such a system are many. Easy to administer, no perverse incentives/disincentives caused by benefits, promote personal responsibility, equal start for every individual, eliminate poverty trap, and it’s fair and reasonable. Even though at 18 you are effectively being handed £100k of ‘free’ money, it is now yours to spend as you wish. If you are ill or unemployed would you spend it so freely compared to current benefits when you know you will receive them month after month? When it becomes your own money you become more careful how you spend it. The fund would give people a lift up, whether to buy a house, start a business, go to university, start a family, etc.

The key to the concept is that beyond the initial payment there is no other help from the state. It would help pay for the expense of children, but not distort decisions by paying benefits per child, for example. It would totally remove distortions inherent in a ‘real time’ benefit system (week to week, month to month, year to year).

To which, the Devil adds,

[Nationmaster] gives the total population as 60,609,153 and the percentage of those aged 0–14 as 17.5%. This gives us 10,606,602 (to the nearest whole person). Next, the total number of those aged 15–19 is 3,992,998. This gives us a rough total of 14,599,600 (to the nearest whole person). Therefore, 14,599,600 x 5,000 = £72,998,000,000 or £72.998 billion.

So, how does that compare to current welfare spending? Well, I worked this out some time ago, from the government’s own statistics [PDF]. The most massive single item is, indeed, social security benefits at £134,463,000,000 for 2006/07 and £140,900,000,000 projected for 2007/08. When you add up all of the different sections, however, the total figure for benefits is somewhere just north of £200 billion. So, Vindico’s idea does actually compare pretty favourably in terms of government spending. Plus, of course, it has all of the other benefits that he listed.

Economists among us may have clearer views than mine, but a few initial thoughts occur. Perhaps the most obvious practical problem is one of transition. The advantages of a scheme like that above would be deferred by, say, a generation or so and would become clear only gradually – while (presumably) running in parallel with the existing welfare system. This may well be prohibitively expensive. Those employed by the state to run the existing benefits system would no doubt have issues of their own, and a generation of 18-year-olds with a sudden £100,000 windfall could have serious effects on, for instance, the property market. (To say nothing of sales of alcohol and scratch cards.) There are also issues of political expedience – of whether one generation of voters would be happy with a change of this kind benefiting the next.

Still, it’s a provocative idea.